How Apple Trounced Nokia with the iPhone

This week, I saw an interesting video in which Nokia showcases its “vision” for 2015. As you watch it, there are very few things the iPhone doesn’t do today. Nokia’s vision is to end up in five years where Apple currently is, effectively forecasting a future where Apple is dominant. Today Apple passed Nokia as the most profitable cell phone vender, and Samsung dropped Symbian (Nokia’s operating system) support. Nokia clearly isn’t having a good week, but that is actually more Nokia’s fault than Apple’s.

We’ve seen giants like Nokia toppled several times – both General Motors and Novell come to mind, for instance. Let’s talk about why this happens.

How Toyota Beat GM’s Ill-Fated Vega

General Motors dominated the world in the 1960s, but just a decade later, Toyota almost put them out of business. Why? GM didn’t realize that the Japanese could cycle designs much more quickly. The American car company actually had a five-year cycle, where it could analyze competitive information and design cars based on it. The problem: By the time they had created cars that could compete with what Toyota was bringing to market in 1960s, it was the 70s, and Toyota kicked the Chevy Vega’s butt.

At that time, advancement was happening very fast, and Toyota was building for a target that existed in the future, while GM was focused like a laser on the present. The end result was that Toyota increasingly brought out better cars, and eventually passed GM as the largest and most successful car company.

Nokia, by focusing too much on the iPhone, appears to be repeating GM’s mistake.

How Microsoft Undermined Novell’s Super NOS

In the 90s, Novell was in trouble. The company’s Network Operating System (Netware), started to look redundant, and the market was beginning to collapse, so Novell came up with the concept of a Super Network Operating System called Super NOS. It released a series of presentations that talked about all of the wonderful features this new operating system on steroids would provide at some future date. The only problem? Microsoft was shipping something called Windows NT Server, and it would do everything that Netware promised for the future, in the present. In the end, a massive number of Netware customers moved to Windows.

By showcasing an iPhone-like future, Nokia is effectively repeating Novell’s mistake and pushing its customers to the iPhone.

Nokia Lost Track of Goals

In both cases, the losing firms focused tightly on the needs of the present, but didn’t focus their development efforts on the future. This is like a runner in a race focusing on where the leader in the race is, and not the goal at the end of the race. In any race, the goal is to get to the finish line first, not get to an intermediate point on the track. But if you can’t see the goal, and focus too tightly on a competitor, you can’t win.

Nokia vs. Apple

Nokia, which is actually very much like the GM of cell phones, has been getting its butt kicked by Apple in what has become the most profitable cell phone segment. With every analyst or customer meeting, execs are likely being asked when they will have a competitive product in the market, and, as a result, they are focused like a laser on Steve Jobs’ butt. The thing is, by the time Nokia finally builds a product that can compete with today’s iPhone, Apple and others will have moved on, and Nokia will still look out of step with the market, and be at increased risk of becoming irrelevant.

How Apple Leads, and Why Steve Jobs is CEO of the Decade

Apple isn’t psychic. The company brought the iPod and iPhone to market by imagining a future and then convincing us this was where we wanted to be. And its designers did make adjustments along the way. For instance, Apple initially didn’t want to do native third-party applications, or license Microsoft’s ActiveSync, but based on developer and customer feedback, they made adjustments so that the future they were building for actually became reality.

Steve Jobs became CEO of the decade this year, and I think Apple’s successful battle with a vastly larger Nokia showcases why. Jobs took on a vastly more powerful dominant vendor in a hard-fought market, and pounded it into the sand. That isn’t done often, it isn’t easy, but it does justify why Steve Jobs deserved the recognition. I wonder if there are any other firms that need to learn this lesson? Another large, dominant firm comes to mind…